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How Bristol-Myers Squibb Company Fell $18.8 Billion in October

What happened

Shares of Bristol-Myers Squibb Company(NYSE:BMY), one of America's largest pharmaceutical companies, fell 18.6% in October, according to data from S&P Global Market Intelligence. Bristol's lead drug failed during a clinical trial with small-cell lung cancer patients, and that failure, combined with a dismal month for biotech overall, incited investors to pummel the stock to its lowest level since January 2017.

So what

The Nasdaq biotechnology index fell a stunning 14.6% in October. While losses this size aren't uncommon for smaller biotechs, Bristol-Myers boasted a $101 billion market cap at the end of September that was cut down as investors worry about the company's lead growth driver, Opdivo. The checkpoint inhibitor earned FDA approval to treat third-line small-cell lung cancer patients based on tumor responses but flopped during the confirmatory study, which was looking for a survival benefit over standard chemotherapy.

Image source: Getty Images.

Bristol investors had been hoping Opdivo could earn an expansion to the much larger population of newly diagnosed small-cell lung cancer patients. In September, a similar treatment from Roche(NASDAQOTH:RHHBY), called Tecentriq, became the first new therapy to outperform standard care in terms of progression-free survival.

Now what

Using results from very different patient populations is a bit like comparing apples to oranges. That said, it looks as if Tecentriq is going to eat Bristol's lunch in the first-line small-cell lung cancer indication. At an interim observation, a majority of patients receiving Tecentriq in addition to standard care survived 18.1 months, which was 33% longer than standard care on its own. That wasn't strong enough to be considered statistically significant, but the IMpower132 study isn't finished.

Roche will present final results next year, but Tecentriq might not be the last of Bristol's problems when it comes to advancing Opdivo to the first-line small-cell lung cancer setting. Merck & Co. expects to report top-line results from Keytruda's Keynote-064 study in January, and AstraZeneca's Caspian study with Imfinzi should have data ready to present a couple of months later.